ABS figures show the cost of living rose 4.5% last financial year boosted by record petrol prices, the biggest rental increases since 1989, higher bank fees and margins, rising health premiums and the Federal Government’s increase in excise tax.

The affect this is having on the housing market is quite significant and reaching all stakeholders including property owners, property seekers and investors.

Property owners need to repay their home mortgages so these inflationary factors mean there is less money to pay the mortgage and may mean the property owner needs to sell their property.

Property seekers/renters who are trying to save a deposit to purchase a property will struggle to save money if the cost of everything around them is rising.

Property investors will have less money to invest in property because the cost of all other things around them is increasing, not to mention the downturn in the share market which is likely to reduced the amount of money they have for property investment.

A higher cost of living isn’t good for the economy and in particular the housing market. The Federal Government doesn’t know what to do, any economist out there?